🇧🇷BCR #68: Brazil Terminates Contract with Fan Token Provider Bitci
🇧🇷BCR #68: Brazil Terminates Contract with Fan Token Provider Bitci
Also: crypto legislation up for likely vote on Tuesday; Richarlison goals become NFTs
Ola pessoal!
Welcome to Brazil Crypto Report for the week of November 21-25, 2022. Diving right in here!
-AWS
Voting Open for 🇧🇷BCR 2022 Most Influential 2022
If you haven’t voted yet for the Brazil Crypto Report Most Influential series, please take a look at this Google Form and select three individuals whom you believe contributed the most to the Brazil crypto world this year (keep in mind they don’t necessarily need to be influential in a positive way).
If there is someone I left off the list whom you think should be included feel free to write their name in and a quick reason for why they should be considered. I will put out a Top 10 list at the end of the year similar to what I did for 2021.
Crypto Vote Scheduled for Tuesday; Asset Segregation Provision Likely Axed
Legislation that would establish a regulatory framework for crypto exchanges appears to be in line for a vote in the Chamber of Deputies this week. Deputy Expedito Netto, the rapporteur for the bill - known as PL 4401 - told Valor that he has the buy-in that he needs from the relevant stakeholders, including Chamber President Arthur Lira:
“I left a meeting with technicians from the parties and the government and they agreed with my opinion. Now the [Lira] will gather party leaders on Tuesday and vote.”
The legislation has been stalled in the Chamber since being approved by the Senate in April.
It appears that the asset segregation provision that was included in the Senate bill but controversially removed by Netto will remain out of the bill. The Banco Central, which previously insisted on including this provision in the text, has agreed to table the subject for discussion at the administrative level. Netto told Valor:
“It is a completely outdated issue. The important thing now is to vote on the matter and leave this and other points for later…. If there is segregation, it will be by an infralegal rule of the Central Bank. It won't be in the law….By the parties' positioning, I believe it will be voted without amendments in the plenary, but the political meeting will be on Tuesday.”
Asset segregation was promoted by ABCripto, a trade group representing local exchanges and crypto companies, and fiercely opposed by overseas exchanges like Binance.
The so-called transition rule that gives foreign companies 180 days to adapt to new rules and apply for a license will likely be maintained.
According to Netto, the only other point that is still being debated is a proposed tax incentive for green bitcoin miners who use renewable energy. This point was approved by the Senate but was removed from Netto’s version of the bill in the Chamber.
Richarlison Bicycle Kick NFTs Sprout Up on OpenSea
Brazilian striker Richarlison’s amazing bicycle kick goal in the opening match against Serbia is now immortalized in various NFT formats on OpenSea.
Richarlison’s personal NFT collection, however, launched in June in partnership with IDG, hasn’t generated much interest. Out of a total supply of 23,406 NFTs, only 149 were sold, according to Portal do Bitcoin.
Brazilian Football Confederation Terminates Fan Token Contract with Exchange Bitci
The CBF terminated its contract with Turkish crypto exchange Bitci after it reportedly stopped making payments agreed upon in its sponsorship contract, first signed in September of last year. The termination occurred just two days after the start of the World Cup in Qatar.
Bitci’s contractual commitments included issuing the official Brazil national team fan token (BFT); it received the right to be the exclusive blockchain partner of the CBF. The BFT token was launched in July and raised R$90 million (US$16.6 million) for the CBF, selling out in 30 minutes.
BFT plummeted 10% on the news of the cancellation, and Bitci must now end the sale of the tokens. It is unclear what type of recourse investors who purchased the token will have, if any.
Bitci was reportedly several months in default on the three year agreement that included sponsorship rights for the main Brazil national team currently playing in the World Cup, as well as the women’s team and U-20, U-17 and U-15. When questioned about the payments delays, Bitci claimed that it was under pressure from Turkish regulators.
Bitci also has broken contracts with McLaren, Spezia (Italy) and Sporting (Portugal), apparently prompted by failure to make agreed upon payments. The status of agreements inked with Ceará, Fortaleza, Sport, Coritiba and Vitória is unclear. (CoinTelegraph Brasil)
After the Serbia match, Bitci tweeted saying that it burned 27,000 BFT, but did not address the contract question.
If you’re confused as to why the CBF partnered with an unknown Turkish crypto exchange to issue its official fan token, you’re not the only one. Portal do Bitcoin looked into the mysterious entity in September 2021 after the deal was announced. Other popular fan tokens like Portugal (POR) and Argentina (ARG) were issued by Chiliz, which is the largest and most popular platform for such issuances.
If you can’t get enough of fan tokens, I created a handy watchlist of the major World Cup coins on CoinMarketCap. Pretty much the same story across the board here as they’ve all sold off quite drastically following a pre-event pump. Brazil’s BFT token is down nearly 65% over the last seven days despite Brazil’s victory in its opening match against Serbia.
🎙Catch the latest episodes of the 🇧🇷Brazil Crypto Report podcast
1️⃣ Andre Franco, head of research at Mercado Bitcoin, joined to discuss the impacts of the FTX fallout on the Brazil crypto market. (Spotify)
2️⃣ If you need a refresher on the crypto regulatory framework in Brazil and what PL 4401 means for the industry, I highly recommend having a listen to my episode with Isac Costa from August. (Spotify)
🗞Brazil Crypto News Rundown
📈 Markets
The Titanium Cripto Structure fund wrote off assets held on FTX on November 22, resulting in a a 10.48% loss in the value of its equity.
The arbitrage fund had assets of R$60 million (US$11 million) and 100 shareholders.
Before the write down, the fund had produced a positive return of 17% for the year and 22% for the 12 months ending October 2022.
The fund did not have any exposure to the FTT token (Valor Investe)
Giant Steps Capital, another Brazilian asset manager, held 12 percent of its Giant Satoshi fund on FTX as late as July, per filings with the CVM, but that it was able to exit the position before the exchange collapsed. The manager told Portal do Bitcoin:
“Giant Steps clarifies that it has an extensive risk policy that encompasses different types of risks and establishes protocols on how to act in the face of events such as the FTX case. Thus, the Giant Satoshi II Master, as well as the manager's other funds, was not affected. Giant used FTX to operate a minority portion of the spot and futures trades in the Satoshi fund's portfolio, positions that were sold in their entirety, with no losses to be recognized. The only action at the moment has been to look for possible alternative platforms.”
Argentine fintech and crypto platform Lemon Cash is laying off ~100 employees, 38% of its staff, amid challenging market conditions. The firm launched operations in Brazil this past summer and had plans to launch a crypto debit card in the country. (CoinDesk)
Bitso stated that it would release an improved version of Proof of Reserves, an attestation of funds called “proof that matters.” This will have a Merkle Tree with information that can be verified across multiple levels and a solvency report. It told InfoMoney in a statement:
“The company states that some of the proof of funds or proof of reservations are only a list of wallets and, although it has become a practice across the market, it raises some concerns for two main reasons: it does not prove ownership of the keys needed to moving coins from exchange wallets and there is no guarantee that the coins in these wallets will be sufficient to cover all liabilities of the exchange.”
Cryptocurrencies and tokenization play a central role in the Banco Central’s strategy for developing Brazil’s financial market, Roberto Campos Neto stated in a lecture at a conference hosted by BlackRock Brasil. He added that he sees the banking system in Brazil migrating from account-based systems to a tokenized economy.
“This is just the beginning! If the tokenization thesis is true, then the 21st century will be a period of creation of multi-asset, regulated, global and tokenized networks…. We think that, despite the recent volatility in the world of cryptocurrencies, this is a trend that is here to stay.” (Portal do Bitcoin) (CoinTelegraph Brasil)
Gustavo Cunha had a good op-ed in InfoMoney arguing that tokenization will be transformational to the mutual fund industry
CloudWalk launched its InfiniteBank product offering access to decentralized banking services such as DeFi loans, and cashbank in its own BRL-backed BRLC stablecoin. The company recently received authorization from the Banco Central to operate as a payment institution.
“All movement takes place on our own blockchain. When transacting, the customer receives the entire amount (regardless of the payment in installments) in his wallet in one business day.” (Crypto Times) (CoinTelegraph Brasil)
Argentine exchange Ripio, which also has a major presence in Brazil, says that it has obtained the licenses necessary to operate in the United States without a local partner. Ripio is also present in Uruguay, Colombia and Mexico. (Neofeed)
Crypto marketplace BitPreço will offer payment services, digital accounts and a cashback card product through its rebranded self, BityBank, in a move toward more traditional financial services, per Valor.
The cryptobank application aims to function similar to other digital banks that have had great success in Brazil
The move comes six months after BitPreço acquired exchange Biscoint. Bitybank will replace the Biscoint app and will integrate digital bank features like deposits, bank slip payments, Pix and mobile top-ups, crypto trading services and DeFi integration
Bitybank will offer an aggressive cashback program using assets like bitcoin, ethereum and solana.
Also in the roadmap is a kid’s savings product that to help parents invest in crypto for their children
BityPreço is in the process of becoming a licensed payment institution through the Banco Central. It currently accesses the Tradfi banking system through Genial and Bankly (formerly Banco Acesso)
BitPreço Ney Pimenta commented:
“Digital banking was a great success in Brazil. Everyone knows how to use and has a digital bank on their cell phone. It is an extremely easy way to bring users to the crypto world with a full service experience where they can buy, sell, withdraw, deposit, exchange for other assets, experience DeFi, with the same ease of investing in savings.”
Brazilian trader André Fauth, who has more than 30,000 followers, was unable to retrieve R$1 million of his funds from FTX when the exchange collapsed during a family vacation in Rio Grande do Norte. (InfoMoney) (Livecoins)
NovaDax listed 18 new coins, including various fan tokens, FLOW, Aptos, REEF and more. (Coin Times)
Exchange Coinext is making virtual artwork tokens available for trading on its platform. José Artur Ribeiro, CEO, commented:
“By providing our customers and potential investors with alternative investments such as credit rights in works of art that can be considered a store of value. Historically, they have outperformed inflation and traditional Stock Exchange indices such as Ibovespa and S&P500.” (CoinTelegraph Brasil)
Trading volume of the Ribus real estate token was up 83% in October on the FlowBTC exchange, surpassing even bitcoin volumes on the platform. (CoinTelegraph Brasil)
Rispar CEO Rafael Izidoro published a Twitter thread challenging his customers to withdraw their bitcoin from his platform to prove that the bitcoin lending company does not face liquidity problems and has adequate reserves to honor all commitments. Rispar is part of QR Capital group and its credit line comes from funds managed by QR Asset Management. (CoinTelegraph Brasil)
📱Adoption
Mercado Bitcoin is creating a discord channel to organize its community. It will make exclusive content and benefits like news, Blockchain Academy courses, chats with specialists and access to pre-sales and reports, etc. (CoinTelegraph Brasil)
Mercado Bitcoin appears to have not renewed its sponsorship of Corinthians for 2023, according to a prominent Corinthians Twitter account. (Livecoins)
DaX Green, a tokenized carbon credit platform, announced a merger with Tacet Vere to help companies and organizations manage and assess environmental impacts. (CoinTelegraph Brasil)
Crypto ATM operator Coin Cloud has enabled Pix for buying and selling cryptocurrencies at its 25 terminals in Brazil. (Portal do Bitcoin) (Valor)
Carlos Lain, a Brazilian developer and creator of the PagCripto brokerage, found a new bug in the Tether stablecoin smart contract on the Tron network. The flaw allows a scammer to fake the origin of a transaction. This in turn can be used to trick the recipient into sending coins to the wrong address in a future transaction. (Portal do Bitcoin)
Two years after launch, Pix has surpassed bank slips and has become the second most popular payment option for e-commerce sites in Brazil. It has processed 26 billion transactions with a volume of R$12.9 trillion in that time period. Gastão Mattos, founder of Gmattos- a consultancy, explained to Exame:
“The most significant value was to include Brazilians in this digital world, and it has a potential consequence because this public becomes eligible to sophisticate the way of paying for things through other electronic processes.”
João Henrique Caldas, the mayor of Maceió, traveled to Miami to learn about cryptocurrency adoption and its innovation ecosystem. (Livecoins)
🎮 NFTs, Gaming and Metaverse
Beats, an Ambev brand, launched its Beats Comunidade NFT project with the goal of using digital art to promote funk music in Brazil. (CoinTelegraph Brasil)
Telecoms operator Claro is launching a World Cup-themed NFT collection to be distributed to select customers during the tournament. The NFTs will offer an exclusive experience and a pair of tickets to a watch party hosted by Budweiser. Ane Lopes, director of brand and communication at Claro, commented:
“Bringing an exclusive Copa NFT collection to our customers meets this quest for innovation, as we are offering a current benefit, which is still in the expansion phase, which will bring fun and the possibility of cheering on events exclusive. And, within the motto that we are bringing in our campaign, Tá na Claro. It's in the Cup. Whether in Qatar, anywhere in Brazil or in NFTs.” (CoinTelegraph Brasil)
Brazilian NFT artist Di Couto was selected to exhibit her work at the UNESCO headquarters in Paris. (CoinTelegraph Brasil)
Mercado Bitcoin announced the launch of a new digital collectibles platform in partnership with Block4. It will feature items initially from three football clubs: Vasco da Gama, Santos and Bahia. (Crypto Times)
Foxbit and OKX Brasil launched a World Cup NFT collection. (Coin Times)
🏛 Public Policy, Regulation and Enforcement
Gisele Bündchen, among other celebrities involved in FTX, is being investigated by the Texas State Securities Board regarding payments made and how they were disclosed. (CoinTelegraph Brasil)
“Pharaoh of Bitcoins” Glaidson Acácio dos Santos had 160 people on his client list from the Universal Church or who worked at TV Record, according to a new report. These individuals combined to lose R$8.7 million (US$3.5 million) in the pyramid. Many of these were attracted to the investment scheme by formal Universal pastor Fabiano Freitas. (Portal do Bitcoin)
Brazilian FTX users and investors have very little chance of recouping funds, tax and bankruptcy expert Marcelo Vicentini of Madrona Advogados told Exame. This is primarily because FTX did not have a registered CNPJ in Brazil and the absence of specific treaties between Brazil and the Bahamas on this subject.
“One of the main reasons for the headquarters to be in places like the Bahamas is the flexibility of the legislation, and they are places that give more protection to the names of investors.”
Federal Police seized cryptocurrencies in a crackdown on a transnational gang involved in the illegal trade of cigarettes. The group owes more than R$2 billion (US$369 million) in taxes. José Eduardo Cabral, son of former Rio de Janeiro governor Sérgio Cabral, is a target in the operation. (Portal do Bitcoin) (Valor)
Federal Police launched Operation Metaverso in an effort to dismantle a gang that used cryptocurrencies to launder R$18.5 million (US$3.4 million) obtained via bank fraud. Search and seizure requests were fulfilled at 11 addresses in the states of Rondônia, Paraná, São Paulo and Mato Grosso do Sul. (Portal do Bitcoin)
The Tribunal de Justiça of the Federal District opened a new concurso to fill 30 vacant judge positions that require knowledge of cryptocurrencies and smart contracts. (Portal do Bitcoin)